15 Top Interest Rate Swap & Yield Stripping DEXs in DeFi

This article will cover the Top Interest Rate Swap and Yield Stripping DEXs which are redefining how we interact with DeFi. These platforms address exposure to interest rate risk, separate principal and future earned income, and provide the option to have fixed and/or flexible returns.

We will break down the characteristics and mechanisms of these platforms as well as the advantages and the distinct approaches of today’s leading DeFi rate-trading platforms.

Key Points & Top Interest Rate Swap and Yield Stripping DEXs

DEX / Protocol	12-Word Explanation
Pendle	Splits yield-bearing assets into principal and yield tokens for fixed-floating trading strategies.
Boros	Offers leveraged interest-rate swaps, trading funding rates through fixed-floating positions until maturity.
Exponent	Uses yield stripping on Solana to create tradable fixed and floating yields.
IPOR	Provides onchain fixed-floating swaps using decentralized interest-rate indices for hedging and speculation.
Voltz	Enabled capital-efficient fixed-floating swaps across lending and staking markets with leverage historically.
Element Finance	Separated principal and yield into tokens, enabling fixed-rate exposure before maturity efficiently.
Tempus	Tokenized future yield streams, letting users trade fixed and variable returns separately.
Sense	Created fixed-yield and floating-yield markets around supported interest-bearing DeFi assets with maturity.
Swivel	Enabled yield tokenization and fixed-rate trading for lending positions through markets onchain.
Yield Protocol	Used zero-coupon bonds to create fixed-rate markets for borrowing and lending onchain.
Notional	Offers fixed-rate borrowing and lending through fCash instruments and automated liquidity pools.
Contango MMedium	Aggregates fixed-rate strategies, enabling leveraged yield trades across multiple DeFi markets efficiently.
FIVA D	Uses yield stripping on TON, splitting assets into principal and yield components.
APWine	Tokenizes future DeFi yield, enabling fixed-rate positions and yield speculation markets directly.
88mph	Converts variable lending yields into fixed-rate deposits with tokenized future-yield exposure onchain.

15 Top Interest Rate Swap and Yield Stripping DEXs

1. Pendle

Pendle is one of DeFi’s more well-known protocols for separating yield farming components. Pendle protocol helps users divide an asset into Principal Tokens (PT) and Yield Tokens (YT). This helps users incorporate principal and yield exposure into separate markets.

Pendle divides yield-bearing tokens into principal and yield tokens to support fixed-floating strategies. Held to maturity, principal tokens, or PTs, support fixed yield exposure

While exposure to variable yield is obtained with Yield Tokens (YT) It supports trading, speculation, and return optimization as well as hedging for traders, liquidity providers, and yield farmers.

Pendle Features

• Yield Tokenization: Separates yield assets into Principal Tokens (PT) and Yield Tokens (YT).
• Fixed-Rate Exposure: Holding PTs results in a predictable return.
• Yield Trading: Exposes users to variable yield trading.
• DeFi Integration: Integrates yield strategies across different assets and DeFi.

2. Boros

Boros focuses on yield trading in the context of interest rates and funding rates and how users want to have exposed to variable rates with leverage. Boros builds on the fixed-floating yield concept from traditional lending by giving users the ability to formulate trading positions around the movement of rates.

Boros provides interest-rate swaps with funding-rate exposure, fixed-floating, through a leveraged position. It helps users achieve directional exposure to funding rates or manage exposure to funding rates.

Because leverage can amplify the potential outcomes, Boros style funding rate markets are intended for users with advanced knowledge of DeFi.

Boros Features

• Interest-Rate Trading: Provides a marketplace for interest-rate and funding-rate trades.
• Fixed-Floating Positions: Allows traders to speculate on future rate changes.
• Leverage: Offers elevated rate exposures for interested traders.
• Maturity-Based Markets: Positions are active in a specified period for settlement or expiration.

3. Exponent

Exponent’s yield stripping and fixed-rate opportunities based on Solana, allows users to get exposure to certain components of an asset’s future returns. In the absence of established versions of structured fixed-rate yields, Exponent uses yield stripping on Solana to create tradable fixed and floating yields.

Because of that, users have ways to block off yield speculation or liquidity provision, as opposed to just holding a yield bearing token. Due to its focus on Solana, Exponent is one of the few protocols that take advantage of Solana’s fast, low-cost transactions.

Exponent Features

• Yield Stripping: Uncouples yield from assets to create independent exposures.
• Fixed Yields: Offers users a more predictable yield outcome.
• Floating Yields: Offers exposure to variable future returns.
• Solana Ecosystem: Utilizes Solana’s fast transactions and comparatively cheap transaction fees.

4. IPOR

IPOR is an interest rate decentralized protocol that aims to adapt traditional interest rate concepts to the DeFi sphere. Its infrastructure employs on-chain interest rate indices to set reference rates and support the offering of fixed-floating swaps. **IPOR offers fixed-floating swaps on decentralized interest-rate indices for hedging and speculating.

These will allow participants to exchange fixed and floating risk exposures without the need to liquidate their holdings. It is desirable for users in the DeFi sphere to manage the risk associated with constantly changing lending rates.

IPOR Features

• Interest-Rate Indices: Decentralized benchmarks to represent the DeFi lending/borrowing rate across different cryptocurrencies.
• Rate Swaps: Bond markets fixed rate vs. floating rate swaps.
• Interest Rate Derivatives: Tools to hedge the risk of exposure to changing lending rates.
• Interest Rate Derivatives: Integrates the concepts and tools of traditional interest-rate derivatives into on-chain FinTech.

5. Voltz

Voltz automated the market maker to allow innovation in fixed vs. floating interest rate exposure swaps. Traditional liquidity structures rely heavily on capital to function. Voltz aimed to solve that problem. Following the launch of Voltz, users were able to trade fixed-floating swaps across leveraged lending and staking markets.

Users could place bets on which way they believed interest rates would move, and Voltz’s liquidity pool served as contrarian interest. It is historically significant because it was one of the earliest examples of an AMM designed to facilitate interest rate swaps, as opposed to a spot trading market AMM.

Voltz Features

• Interest Rate AMM: offers automated market making for on-chain interest rate trading.
• Fixed-Floating Swaps: fixed-variable rate exposure swaps.
• Capital Efficiency: Designed to cultivate better capital allocation in the treasury market.
• Leveraged Strategies: Historically equipped investors with the ability to take more exposure to of interest rate movements through the use of leverage.

6. Element Finance

Element Finance designed an architecture that allows users to decompose yield into separate principal and yield components controlled by the user. Previously, assets in DeFi had no option to trade principal and yield components separately.

Element Finance did just that by separating principal and yield into individual tokens. Principal tokens mature at a known value, while the yield component is traded separately.

This design pioneered the use of yield to create different fixed income derivatives in DeFi. Thus, Element became a noteworthy early example for fixed rate and yield tokenization.

Element Finance Features

• Principal Separation: Principle and yield components of interest are separated.
• Fixed-Rate Exposure: Some principal instruments provide fixed returns.
• Yield Trading: Separate from principal, exposure to future yield can be traded.
• Fixed Income Innovation: Applied ideas from traditional fixed-income markets to decentralized finance (DeFi).

7. Tempus

Tempus was a Defi fixed income protocol designed to provide flexibility to divide yield into separate fixed and variable components to allow for more flexible trade. As such, it operated on yield bearing assets and allowed users to secure a fixed return while still being exposed to potential yield variance.

Tempus tokenized future yield streams and allowed users to trade fixed and variable returns. This yield separation developed a number of strategies, such as hedging, speculating, or providing liquidity. Tempus showed the application of fixed income concepts in a DeFi yield environment using smart contracts.

Tempus Features

• Yield Tokenization: Converts future yields to tradable financial components.
• Fixed Returns: Users are offered the opportunity to target predetermined returns on yield-bearing assets.
• Floating Exposure: Separation of exposure to future yield rates.
• Maturity Markets: Employs a defined period of time for maturity of fixed income strategies.

8. Sense

Sense invented fixed-yield and floating-yield markets using DeFi assets to create a principal and yield separation, allowing users to trade yields in accordance with their desired strategies. Users had the option to secure a fixed return or be exposed to the potential yield variance.

Sense introduced maturity to DeFi assets and markets to allow for more traditional fixed-income[A1] comparisons. The protocol illustrated how maturity-based markets helped DeFi yield become more comparable to traditional fixed-income assets.

Sense Features

• Fixed-Yield Markets: Provides fixed-income opportunities based on supported assets.
• Floating-Yield Exposure: Users maintain exposure to uncertain future yields.
• Yield Separation: Separates the yield from the value of the principal.
• Maturity-Based Trading: Trading based on maturity and the agreed settlement period.

9. Swivel

Swivel set out to incorporate fixed-rate markets in decentralized finance (DeFi) by unbundling lending positions into principal and yield. Swivel’s model served users that were not satisfied with lending rates that are constantly fluctuating.

Swivel offered tokenized yield and trading of fixed-rate loans on the blockchain. Tokenizing future yield enabled the protocol to bring different clients to take opposite positions on the future value of the yield.

One client could decide to have a steady stream of income over a period of time, while the other could speculate on potentially high yield over the future time period. It was the first project to establish fixed-rate yield trading in DeFi.

Swivel Features

• Yield Tokenization: The exposure to the future lending yield is separated from principal.
• Fixed-Rate Trading: Provides users with the ability to trade for fixed returns.
• Onchain Markets: Naturally brings yield trading to the forefront through smart contracts.
• Rate Speculation: Participate in the speculative trading of anticipated changes in interest rates.

10. Yield Protocol

Yield Protocol offered margin loans and borrowing on the blockchain that was in the style of zero-coupon bonds. Unlike traditional margin loans, their design utilized future claims that were represented by tokens that would become redeemable on a certain date.

Yield Protocol built fixed-rate markets for borrowing and lending on the blockchain through zero-coupon bonds. The protocol allowed borrowing and lending to be set on a certain time period.

The protocol was groundbreaking, as it was the first of its kind to integrate fixed-income concepts into blockchain. It also showed that use of predetermined maturity dates and fixed values would create more predictable interest-rate products in DeFi.

Yield Protocol Features

• Zero-Coupon Bonds: Instruments representing future claims with definite maturity, locked in through bond-like constructs.
• Fixed-Rate Lending: Borrowing and lending agreements are made based on fixed rates.
• Maturity Structure: Positions have specific maturity dates and repayment characteristics.
• DeFi Fixed Income: Implements traditional bond concepts in decentralized lending markets.

11. Notional

Notional is a decentralized fixed-rate lending and borrowing protocol. Users can maintain control of floater rates with Notional’s fCash system if they so choose. fCash signifies an asset with a set maturity date.

Because of this feature, Notional allows users to borrow and lend at fixed rates. Notional’s liquidity pools enable users to trade claims on certain assets for the present.

Borrowers of Notional’s funds can predict repayment amounts, and lenders can provide a guarantee to their users of a given return. Notional is a well known protocol in the Decentralized Finance (DeFi) space for fixed-income.

Notional Features

• fCash Instruments: fCash stands in for claims against an asset at maturity.
• Fixed-Rate Borrowing: Provides fixed borrowing costs to borrowers.
• Fixed-Rate Lending: Fixed borrowing costs for lenders are offered.
• Liquidity Pools: trading between current and future assets is facilitated by use of automated liquidity pools.

12. Contango

Contango is a DeFi protocol that offers fixed-rate interest strategies and leveraged lendingin multiple decentralized (DeFi) lending ecosystems. While most yield farming strategies focus on lending and borrowing, Contango offers yield strategies based on fixed-rate interest loans.

As a yield farming strategy, Contango Ecosystem aggregates each of these strategies as fixed-rate loans. With Contango, users don’t have to manage each underlying position to achieve different yield opportunities in multiple markets.

As is the case with leveraged protocols, Contango introduces additional risks of liquidation, market, and smart contract risks.

Contango Features

• Leveraged Trading: DeFi markets allow the construction of leveraged trading positions.
• Yield Trading: offers access to trading different interest rate and yield differentials.
• Market Aggregation: Brings together multiple decentralized lending marketplaces.
• Advanced Trading: For clients looking to utilize sophisticated trading techniques.

13. FIVA

FIVA is a yield stripping protocol for the TON ecosystem. It separates the value of an asset and the future yield. Once divided, the components can potentially be transacted or employed in DeFi strategies. FIVA uses yield stripping on TON, separating assets into principal and yield components.

By differentiating the economic exposures, FIVA aims to provide flexibility to its users in the management of yield.

Users focused on the principal can target the value of the underlying asset, and users focused on yield can target the future returns. When compared to its Ethereum- and Solana-centered peers, FIVA stands out due to its TON-based infrastructure.

FIVA Features

• Principal Tokens: Offers exposure to the principal.
• Yield Components: Separates exposure to the different elements of the future returns.
• TON Ecosystem: offers its product and service within the TON blockchain and its DeFi
• Yield Stripping: Separates the yield exposure from the principal.

14. APWine

APWine is a decentralized protocol for tokenizing the future yields that are generated by DeFi instruments and yield-generating assets. The separation of principal and yield exposure offers speculation and risk management opportunities.

APWine tokenizes future DeFi yields and offers fixed-rate positions and markets for yield speculation. **Users can potentially sell their future yield or buy future yield exposure, thus leveraging the yield speculation opportunity.

APWine Features

• Future-Yield Tokenization: Converts expected future DeFi yield into tradable exposure.
• Yield Markets: Brings exposure to future returns to the marketplace.
• Risk Market: Helps separate exposure to current assets from future income.
• Yield Speculation: traders can take a position on expected future yields.

15. 88mph

As an early player in DeFi, 88mph specialized in converting variable lending yields to fixed rate lending yields. Borrowers deposited funds and received future payment obligation tickets together with future yield tickets.

88mph converts variable lending yields into fixed-rate deposits with tokenized future-yield exposure onchain. Market participants were able to secure known returns and to create markets for future yields.

This design is innovative within the context of DeFi fixed income protocols because it demonstrated how variable lending rates can be converted to more structured financing instruments and loans leveraging blockchain-based smart contracts.

88mph Features

• Fixed-Rate Deposits: has historically valued the transformation of flexible lending returns into fixed returns.
• Future-Yield Exposure: Utilizes tokenized financial instruments that enable exposure to future-yield characteristics.
• Variable-Rate Conversion: Structures more complex financial products through the packaging of variable lending returns.
• Smart Contracts: Implements financial contracts on blockchains to automate deposits, yields, and settlements.

Conclusion

In Conclusion Top Interest Rate Swap and Yield Stripping DEXs elevate the potential of DeFi by allowing users better control over future yields and how they manage their interest.

Specifically, Pendle, Boros, Exponent, IPOR, and Notional use different methods to offer fixed-rate exposure and exposure to the management of yield and rates.

Users are advised to look at the infrastructure and evaluate the risks before engaging a certain product in their DeFi journey.

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